L&G Workplace Pension advice

Pwillow7

Hi,

First time poster here. 

I have a workplace pension which is L&G PMC  2035_2040 Target Date Fund 3,I have had it since May this year, it has seen a gain of £798.87 (8.73%)
I have no clue about investing or pensions and just wanted some advice and opinions about if this is a good fund and if anyone has any recommendations for better performing ones if available. 
Appreciate the help, thank you. 

flaneurs_lobster

Gain of 8.73% in 8 months sounds pretty good to me.

Need more information to help really. Start with your age, how much you earn, what contributions are you and your employer making each month? 

Albermarle

The first thing to appreciate is that the pension and the investment fund are two different things.

The pension you pay into and get tax relief on the contributions, and your employer pays in also ( how much varies with the employer but there is a minimum) . When you withdraw from the pension, ( when you reach the required age) you get some tax free and the rest is taxable.
It is good way to save for retirement, as you get a lot more 'free money' going in ( tax relief and employers contribution) than you will pay tax when withdrawing .

Inside the pension, your money is in investments. There is normally a choice and you can choose which one(s) you want. If you do not choose anything, your money goes into a default fund, which I am guessing is the one you are in.
It looks like the fund is geared towards a retirement date (2035- 2040) and the composition of the fund will change as you get nearer to those dates.
As 'I have no clue about investing' it is probably best to leave it alone .
Unless ideally you want to spend some time learning more.

just wanted some advice and opinions about if this is a good fund and if anyone has any recommendations for better performing ones if available. 

There is no such thing as a 'good' fund, because what is suitable for one person may not be for another.

There will be funds in your pension that will have grown faster, but they will be at higher risk if there is a stock market crash. Do you want to take more risk ?

Sam_666

Google is your friend. Also on LG you can find all info and fact sheets.
https://literature-lgim.huguenots.co.uk/srp/documents-id/bc0a9aba-ee52-41a8-a149-baad3199ce13/Factsheet.pdf

I personally would run a miles away from any "target date fund", as they are generally aimed for annuity and not good deal for drawdown.
Check if there is S&P500 or WorldWide index tracker on LG and switch to that one. Make sure that fees are low and subsided by employer. Fees should be less then 0.30% AMC. Stay away from any "Active" funds!

If you want to learn about pensions, there are tons of material on web. But you can start here:
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics
LG probably has their own webpages on subject.

Pwillow7

flaneurs_lobster said:

Gain of 8.73% in 8 months sounds pretty good to me.

Need more information to help really. Start with your age, how much you earn, what contributions are you and your employer making each month? 

Thank you, I'm 53,earning 30k plus per year, i put 14% into my pension and my employer puts 6% in. 

Pwillow7

Albermarle said:

The first thing to appreciate is that the pension and the investment fund are two different things.

The pension you pay into and get tax relief on the contributions, and your employer pays in also ( how much varies with the employer but there is a minimum) . When you withdraw from the pension, ( when you reach the required age) you get some tax free and the rest is taxable.
It is good way to save for retirement, as you get a lot more 'free money' going in ( tax relief and employers contribution) than you will pay tax when withdrawing .

Inside the pension, your money is in investments. There is normally a choice and you can choose which one(s) you want. If you do not choose anything, your money goes into a default fund, which I am guessing is the one you are in.
It looks like the fund is geared towards a retirement date (2035- 2040) and the composition of the fund will change as you get nearer to those dates.
As 'I have no clue about investing' it is probably best to leave it alone .
Unless ideally you want to spend some time learning more.

just wanted some advice and opinions about if this is a good fund and if anyone has any recommendations for better performing ones if available. 

There is no such thing as a 'good' fund, because what is suitable for one person may not be for another.

There will be funds in your pension that will have grown faster, but they will be at higher risk if there is a stock market crash. Do you want to take more risk ?

Thanks for your advice, appreciate it, yes, I really don't have any experience with investing, I just wanted to reach out and get some different opinions to give me some options to consider. 

Pwillow7

Sam_666 said:

Google is your friend. Also on LG you can find all info and fact sheets. 

I personally would run a miles away from any "target date fund", as they are generally aimed for annuity and not good deal for drawdown.
Check if there is S&P500 or WorldWide index tracker on LG and switch to that one. Make sure that fees are low and subsided by employer. Fees should be less then 0.30% AMC. Stay away from any "Active" funds!

If you want to learn about pensions, there are tons of material on web. But you can start here:
LG probably has their own webpages on subject.

Thanks, rreally appreciate this, I will check out this info and take it from there, I just want to get the best out of my pension before I retire. 

Linton

The L&G fund seems a sensible broadly invested but focussed on growth choice in the years up to 10 years before your stated retirement date.  From then it steadily de-risks to become a fund mainly focussed on retaining wealth at retirement.

This leads to 2 considerations...
1) Are you planning to retire in the 2035-2040 timeframe?  If for example you were planning to take early tretirement in 5 years or less you may wish to reconsider your investments. Better check what the assumed retirement date is.
2) When you retire are you planning to spend the money on an annuity or are you more ikely to steadily withdraw the money from the pension during retirement? If the latter you would be invested over perhaps a further 30 years so nothing very different need happen to your pension investment at retirement.

So no urgency, but it would be a good idea to start thinking about when you intend to retire and how you will manage your money in retirement.

Two points on whether you should change the fund...
1) The funds available to you are dependent on the pension scheme, some schemes provide a very wide choice others are more limited.
2) Chasing high growth means taking higher risks.  If a crash happens the higher growth funds tend to suffer the most.  What would your reaction be to your pension dropping by say 50% shortly before retirement? Your fund at the moment is moderately high risk but the risk level will automatically drop considerably as you reach your specified retirement date.

Given your current fund is not a foolish choice, more important than which fund to use is to work out how much money you will need in retirement and hence what contributions you should be making now to ensure you can retire when you wish at an acceptable standard of  living.

Pwillow7

Linton said:

The L&G fund seems a sensible broadly invested but focussed on growth choice in the years up to 10 years before your stated retirement date.  From then it steadily de-risks to become a fund mainly focussed on retaining wealth at retirement.

This leads to 2 considerations...
1) Are you planning to retire in the 2035-2040 timeframe?  If for example you were planning to take early tretirement in 5 years or less you may wish to reconsider your investments. Better check what the assumed retirement date is.
2) When you retire are you planning to spend the money on an annuity or are you more ikely to steadily withdraw the money from the pension during retirement? If the latter you would be invested over perhaps a further 30 years so nothing very different need happen to your pension investment at retirement.

So no urgency, but it would be a good idea to start thinking about when you intend to retire and how you will manage your money in retirement.

Two points on whether you should change the fund...
1) The funds available to you are dependent on the pension scheme, some schemes provide a very wide choice others are more limited.
2) Chasing high growth means taking higher risks.  If a crash happens the higher growth funds tend to suffer the most.  What would your reaction be to your pension dropping by say 50% shortly before retirement? Your fund at the moment is moderately high risk but the risk level will automatically drop considerably as you reach your specified retirement date.

Given your current fund is not a foolish choice, more important than which fund to use is to work out how much money you will need in retirement and hence what contributions you should be making now to ensure you can retire when you wish at an acceptable standard of  living.

Really

Appreciate your advice on this.

I don't plan to retire until my official retirement age, which is 67 and I may work for another year or so after that, but no more than that. 

I wouldn't want the fund to reduce drastically shortly before retirement, I also plan to steadily withdraw from the pension during retirement. 

Albermarle

Sam_666 said:

Google is your friend. Also on LG you can find all info and fact sheets.
https://literature-lgim.huguenots.co.uk/srp/documents-id/bc0a9aba-ee52-41a8-a149-baad3199ce13/Factsheet.pdf

I personally would run a miles away from any "target date fund", as they are generally aimed for annuity and not good deal for drawdown.
Check if there is S&P500 or WorldWide index tracker on LG and switch to that one. Make sure that fees are low and subsided by employer. Fees should be less then 0.30% AMC. Stay away from any "Active" funds!

If you want to learn about pensions, there are tons of material on web. But you can start here:
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics
LG probably has their own webpages on subject.

I personally would run a miles away from any "target date fund", as they are generally aimed for annuity and not good deal for drawdown

Historically they were aimed at people wanting to take an annuity, but most currently active ones are now aimed at drawdown, or there is a choice .
Having said that even the ones aimed at drawdown, seem to overdo the derisking.

Check if there is S&P500 or WorldWide index tracker on LG and switch to that one.

These funds might be suitable for you, but they are far too potentially volatile for the majority of investors. Especially inexperienced ones, who would likely be horrified by the scale of losses possible in a big market crash.

dunstonh

Pwillow7 said:

Sam_666 said:

Google is your friend. Also on LG you can find all info and fact sheets. 

I personally would run a miles away from any "target date fund", as they are generally aimed for annuity and not good deal for drawdown.
Check if there is S&P500 or WorldWide index tracker on LG and switch to that one. Make sure that fees are low and subsided by employer. Fees should be less then 0.30% AMC. Stay away from any "Active" funds!

If you want to learn about pensions, there are tons of material on web. But you can start here:
LG probably has their own webpages on subject.

Thanks, rreally appreciate this, I will check out this info and take it from there, I just want to get the best out of my pension before I retire. 

As much as the internet can be useful at times, you also get duff posts that give you recommendations despite not knowing anything about you and remember it can be the blind leading the blind.

Be on guard.